Thursday tips round-up: BAT, Carpetright, CSR...

28th Oct 2010 06:06

Tobacco is one of the most defensive sectors in a downturn, for one simple reason. Smokers, particularly in the emerging markets, typically refuse to give up their habits, irrespective of how much companies raise prices. Certainly, the shares of British American Tobacco (BAT), the world's second-largest quoted tobacco group, have put in a great performance over the past year. However, shares in BAT are starting to look pricey and they trade on a 2011 price-to-earnings ratio of 12.4. The Independent rates them no more than a 'hold'.When analysts' forecasts for the current financial year, now only days off its halfway point, vary from £20 million to above £30 million, this means one thing. In the words of the old Hollywood saw, nobody knows anything. Likewise, the market's inability to read the runes on Carpetright for the current year merely means that the outlook for the next few months' trading is impossible to discern. As yesterday's statement admits, nothing is going to happen until the economy improves. At the lower end of profits forecasts, the dividend is not too well covered. Sell, reckons the Times.The UK semiconductor industry is in rude health, although investors do not always see it that way. Yesterday, Cambridge-based CSR announced a 10 per cent bump in third-quarter revenues but the disappointing guidance - mainly because of its lack of presence in the smartphone market - saw the stock smashed 10 per cent. CSR is also expecting a weaker fourth quarter. The fall in the share price looks like a buying opportunity, the Independent thinks.Sounding like a quoted undertaker issuing a profit warning in a mild February because people aren't dying fast enough, Helphire Group yesterday blamed poor market conditions on too few road accidents. Shares in the business, which provides cars and other cover to drivers who are not at fault in an accident, were off 28 per cent yesterday and trade on little more than three times' this year's earnings. Still no reason to chase, thinks the Times. At the end of last week, London-listed Dechra Pharmaceuticals unveiled the acquisition of US group DermaPet. It looks like a canny move for the veterinary products group. Not only does it bring some significant new products into the company, but it shores up the group's US sales team as well, bringing critical mass to its operations across the pond. The shares were first recommended on October 25 last year at 427.9p and they are now up 23pc compared with a market up 8pc. The rating on the shares remains buy at the Telegraph. Laird put out a solid trading statement yesterday that showed the electronics company recovering from a harrowing 2009, when business fell through the floor in the wake of the financial crisis. The company, which makes electromagnetic shields, antennae and other parts for products such as computers and mobile phones, also had to recover from losing a big chunk of business from Nokia. Laird is still a business in transition and so we are sticking to the hold recommendation that we gave to the company's stock in March, says the Independent. The Times is a little more upbeat. It says the business is still tied to the fortunes of Nokia, its largest, unacknowledged customer, Motorola and Sony Ericsson, which have had difficulty making headway in the smartphone market. The shares have bounced significantly since the summer but sell on less than 11 times' next year's earnings. Hold, but buy on weakness, the paper says. Another exciting day for investors in Desire Petroleum, which soared by 51 per cent after someone, presumably on the wrong side of the recent share price fall, started to ramp the stock on bulletin boards claiming a takeover approach. There is, apparently, no news and so no formal announcement. These oil explorers are notoriously volatile, we all know, but frankly this isn't investment, this is gambling by another name, says the Times. It's been a great year for Cineworld so far - and the first instalment of the final Harry Potter film has not even hit its screens. This "guaranteed blockbuster" should keep Cineworld's seats full in the latter part of the year. The shares have shown considerable capital appreciation - rising by 82pc compared with the FTSE 100 up 51pc but remain a buy as both a yield play and a growth story, according to the Telegraph.Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.